Inside the Making of Greg Flynn’s Franchising Empire

By definition, Flynn Restaurant Group is a multi-unit franchisee. But the descriptor doesn’t fully capture what industry veteran Greg Flynn and his team have built across more than two decades.

The organization is the largest operator for Arby’s, Pizza Hut, and Applebee’s, the second-biggest for Taco Bell and Panera, and the fifth for Wendy’s.

That equates to 2,355 restaurants nationally, 73,000 employees, and $3.7 billion in annual revenue, making Flynn Restaurant Group the largest industry franchisee in the U.S. and potentially, globally. The company stretches more than 3,000 miles, from Portland, Maine, to Portland, Oregon.

Its most significant move came in 2021, with a $552.6 million purchase of 937 Pizza Hut and 194 Wendy’s stores from bankrupt operator NPC International—the largest franchise transaction in U.S. history.

“You add all this up, it completed our journey in a way that was 100 percent consistent with our strategy,” Flynn says.

Formation of Flynn

That journey Flynn speaks of began in the mid-1990s via World Wrapps, a restaurant that “started the whole wraps phenomenon,” he says. The company was founded by a classmate from the Stanford Graduate School of Business, and Flynn decided to make a small investment. The first unit opened in San Francisco in February 1995, with lines around the block.

“Everyone thought ‘oh my God, we’ve got the next Starbucks on our hands, and we need to bring this to market as fast as possible,’” Flynn recalls.

To accelerate development, Flynn agreed to build stores in Seattle, where he was growing a budding real estate business. Between 1995–1999, he opened 14 units, and was quickly introduced into the “school of hard knocks for running restaurants.”

He learned to be a jack of all trades working in the front of house, back of house, construction, and other various tasks. Flynn also recognized that because he was in the beginning stages of an independent restaurant transforming into a small chain, he was playing in the riskiest end of an already treacherous sector.

Nearly all aspects were inherently more difficult, whether it was convincing landlords to lease space, vendors to sell their equipment, employees to come work, or customers to try the food.

“And you can’t borrow a dime for it, except on a full recourse basis,” Flynn explains. “Basically, you have to come up with all the money to do this.”

But in the late 1990s, he became aware of a financing opportunity in which he could receive all the necessary funds to buy into a top-tier franchise restaurant.

“I looked at this and it’s like wait a minute, I can borrow all of the money on a non-recourse basis to do this,” Flynn says. “And then once you do it, the customers already know you, employees know you and want to work for you, the landlords know you and want to lease to you, vendors know you and want to sell you equipment. Everything about it is easier.”

In that era, the hottest segment was casual dining, and the leader in the category was Applebee’s, Flynn says. So he took out a loan and purchased eight stores in the Seattle market.

He bought those Applebee’s restaurants from Cleveland-based franchisee Don Strang III, who owned roughly 70 units in Minnesota, Ohio, and Indiana, and was starting to develop New Jersey and Delaware. His Seattle outlets, however, were struggling due to expensive real estate, construction, wages, and food. The restaurants earned about $45,000 per week.

Flynn entered the venture with Brad Pettinger, who he recruited to build the World Wrapps business. Neither had much knowledge on running a full-service restaurant, but that void was filled by Dan Krebsbach, who spent years working for Strang in the Minneapolis and Seattle markets. Subsequent to the acquisition, he joined Flynn’s company as director of operations.

“He is perhaps the best restaurateur I’ve ever met in my life,” says Flynn, describing Krebsbach. “Consummate professional. And he said, listen, we can make it here in this market, but we need to do things differently than the way they’re done in the Midwest.”

Flynn and Pettinger gave Krebsbach freedom to make operational and CapEx decisions. And to ensure everyone’s interests were aligned, the duo shifted his compensation heavily toward profit sharing and gave him an equity interest. Krebsbach launched multiple initiatives, such as leaning into the bar and late-night business, shifting promotions to different lines or products, and stacking employment to meet higher sales volumes.

Within half a year, average weekly sales grew to $60,000. The group proceeded to open a ninth and 10th restaurant, which debuted with high volumes. It was at this point Flynn and Pettinger realized they were on to something major.

A couple of years later, Flynn contacted Strang again and bought the rest of his stores, swiftly expanding the footprint from 10 to 72 units.

“When you think of when was Flynn Restaurant Group founded, maybe it was when we first got in the restaurant business in ’95, but maybe it was when we first got into Applebee’s in one market in ’99,” Flynn says. “That’s what I normally think of it as, but maybe it was in 2001 when we assumed our current configuration of being a multi-market operator.”

Pizza Hut

“The portfolio that we bought was pristine,” Flynn says of the Pizza Hut and Wendy's brought in through its 2021 deal with NPC International.

Extending the Platform

Flynn and Pettinger handed off the World Wrapps restaurants and committed themselves to becoming a lead expert in running Applebee’s stores.

Flynn Restaurant Group did just that, growing to more than 400 in the next decade.

By 2011, Flynn felt the company had the requisite capital, experience, and industry knowledge to become a multi-brand platform. When deciding what chains to pursue, the organization listened to the marketplace and decided to model itself after the composition of the restaurant industry, which at the time was 60–70 percent fast food and 20–25 percent full service, Flynn says. The rest was filled by the small, but growing fast-casual space.

“The idea there is, we could guess at which segment is going to be the winner in the long run,” Flynn says. “But that’s hard to do and it comes and goes and it’s just that the safest bet is to diversify along the lines of what the market is saying to you. And that may change over time.”

The other key factor dated back to Flynn Restaurant Group’s origin—only associating with mature, proven brands that have been around for decades.

The company entered fast food through Taco Bell in 2012, and now operates 280 restaurants in nine states. For fast casual, the only true options, Flynn says, were Chipotle and Panera. Since Flynn Restaurant Group already operated Taco Bell and Chipotle didn’t franchise, Panera became the No. 1 option. The operation was established in 2014, and now includes 133 bakery-cafes in eight states.

“It took a while to actually get into the Panera system,” Flynn says. “Panera hadn’t had a new franchisee in 10 years at the time we finally entered, and it took getting to know [founder] Ron Shaich personally and convincing him that we would be good for the brand.”

Flynn Restaurant Group followed that up in 2018 with Arby’s, through an acquisition of nearly 370 restaurants in nine states. At this stage, the company had the quick-service presence it desired, but it was still outside two major sub-segments—burgers and pizza.

That is until NPC, a franchisee of more than 1,200 Pizza Hut and 390 Wendy’s restaurants, entered the fray. Hampered by COVID and steady declines in its Pizza Hut business, the franchisee declared bankruptcy in July 2020 and looked to facilitate a sale.

“We had to get comfortable that Pizza Hut as a brand was in a good place, going in a good direction, and we got very comfortable with that,” Flynn says. “All brands have good times and bad times in our experience, and Pizza Hut had a few really rough years. It’s one of the things that created the opportunity for us to buy NPC.”

Before the sale agreement, NPC shut down its worst 300 units, which Flynn calls “every restaurateur’s dream.” The 390 Wendy’s units were divided among Flynn Restaurant Group and a collection of Wendy’s franchisees.

The transaction closed March 2021. On a trailing 12-month basis, Flynn says both divisions have experienced record years.

“The portfolio that we bought was pristine,” Flynn says. “I mean there were almost no losers in it. The question was, was it going to stay that strong after COVID was over or once it subsided a little bit. Our view was that strength was actually going to continue. And we’ve seen it continue for the subsequent year after that transaction. Both are going to perform at about the same level, or a little bit better, post-COVID than they performed in ’20, which is to say very strong and right to our plan.”

Wendy's

"There are not many U.S.-based franchise operators that have any international presence, but there are franchise operators internationally that span multiple countries very successfully, and so I can see that being an evolution,” Flynn says.

Driving Development

Flynn compares the makeup of Flynn Restaurant Group to a federal/state system.

The “states” are clusters of 20–50 restaurants run by “governors,” or market presidents. The geography is tight enough for these executives to frequently visit restaurants and familiarize themselves with guests, vendors, and other assets. That puts them in the best position to make informed decisions, Flynn says.

The “federal” portion is the myriad resources Flynn Restaurant Group provides these clusters, like accounting, administration, finance, human resources, I.T., purchasing, training, and real estate—almost as if it were a franchisor.

Similar to how Flynn and Pettinger approached Krebsbach in the early days, market presidents have equity in the business and power to make key decisions.

“That part of our structure and our philosophy has mapped very well from our origins in full-service dining into our entry in quick service and fast casual,” Flynn says.

The fact Flynn Restaurant Group is the largest franchisee—or close to it—in all of its systems is deliberate, Flynn says. This is not only because of the beneficial scale economics, but also the meaningful seat at the table with franchisors. The objective is to serve as the best, most collaborative operator in each system.

The relationship is mutually beneficial. Flynn Restaurant Group gathers intimate knowledge about ideas coming down the pipe, and in turn, the giant franchisee leverages valuable insight from multiple food segments.

“We respect confidentiality, but there’s a lot of general learnings we get from being very deeply inside multiple systems,” Flynn says. “And sometimes we have a broader view than our franchisors because of what we see.”

Flynn Restaurant Group participates in all of the notable franchise councils for each brand and remains significantly active in development.

Flynn says growth conversations between franchisee and franchisor go exactly as one may think—drive top-line sales, maximize operating profit margins, and determine where to go with futuristic, low-cost prototypes.

Flynn says the company is proactive when it comes to piloting new designs, equipment, and processes.

“We love to be a test partner because it’s helpful to the system, but also so that we can ourselves gain conviction around it through our own experience,” Flynn says. “And often, when we do that and we’re on board, it really helps bring other franchisees in the system along with us because as a large franchisee, we’re very diligent.”

“We have a whole data analytics team and then we have our own consumer insights team, as well,” he adds. “And so we do our homework very, very carefully on anything we look at. And so, once we’re on board, franchisors often find that helps get the whole system on board.”

The franchisee has a front-row seat to some of the most innovative brands in the restaurant industry. For instance, a Taco Bell operator in Minnesota is building a “Defy” concept—a 3,000-square-foot, two-story prototype with four drive-thru lanes (three for mobile orders).

There will also be a digital check-in screen where mobile order customers can scan their order via QR code and pick up their food via a “bell-evator” lift system.

Additionally, in November, Panera opened its first NextGen bakery-café, featuring a double drive-thru, automatic loyalty identification, digital menuboards, and a reorganized interior where the baking process is put on full display.

Flynn Restaurant Group voluntarily completed 10 Panera remodels to test new ideas. Some changes were good, some weren’t, but the important part is everyone learned from it.

“We were happy to be the one to try those things,” Flynn says. “We have enough scale that we can try 10 remodels and if it doesn’t work, OK. I mean, call it that, right? So I think, in all of our brands, everyone’s leaning more into digital, everyone’s leaning more into off-premise and convenience, and the physical assets will evolve to advance those goals.

Panera Bread

Flynn directs about 133 Panera bakery-cafes in eight states.

What Lies Ahead

Although the NPC acquisition completed a 10-year quest toward becoming a multi-platform powerhouse, it by no means closed the door on future acquisitions.

The company will continue to be opportunistic by applying the same guidelines it used to obtain its quick-service and fast-casual portfolio. However, Flynn says, the organization will be mindful of competitive restrictions and prioritizing expansion within its existing footprint.

In the future, it could potentially mean growth outside the U.S. “There are not many U.S.-based franchise operators that have any international presence, but there are franchise operators internationally that span multiple countries very successfully, and so I can see that being an evolution,” Flynn says. “I can see that being an opportunity for us that we start taking our experience, our platform, our capital, and take advantage of international opportunities.”

The organization would consider becoming the proprietary owner of a brand, but Flynn recognizes that takes a much different skillset.

Over the years, he’s seen successful franchisees become concept owners, but fail at taking the restaurant to the next level.

“There’s a certain hubris that sometimes franchise operators can fall victim to thinking—I’m very successful, and that success is me and so I can do anything,” Flynn says. “I can go buy a brand, and I’ll run that just as well. What they’re maybe not giving enough appreciation to is the fact that it’s not just us. We’re part of a system, and the system is successful, and you may be a great franchise operator, but that doesn’t mean necessarily you’re going to be great at running a brand.”

In some cases, larger operators—like Burger King franchisee Carrols Restaurant Group—go public and trade on the stock market. For Flynn, reasons to go public include needing capital that can’t be accessed in other ways and seeing a big valuation difference between serving as a public company and as a private one. Neither are close to true for Flynn Restaurant Group.

Flynn also notes that being public provides currency that can be used for acquisitions and allows a company to share equity with employees.

He sees those as legitimate reasons, but not enough for him to make that move.

“I actually love being a private business,” Flynn says. “It helps us keep a very long-term perspective and not worry about quarter-to-quarter results nearly as much as what’s the outcome in five or 10 years. Then there are restrictions we have in our franchise documents. I mean, it’s conceivable, I could get all of our franchisors on board to go public, but it would be a heavy lift. And, frankly, given that I don’t want to anyway, I think it’s highly unlikely we will ever be public.”

In terms of the industry as a whole, Flynn foresees more consolidation among franchisees, and for good reason.

In 2021, Flynn Restaurant Group was named Franchisee of the Year for Applebee’s and Arby’s because of its ability to invest in people and assets at a level smaller operators can’t replicate.

Flynn says franchisors have come to realize that big doesn’t mean bad. In fact, big could mean good, or in the case of Flynn Restaurant Group, extremely good.

“I’d like to think we are close to being the best partner for our franchisors, and our scale is part of that, it helps with that, it doesn’t hurt that,” Flynn says