| Do you know what Burger King, Wendy's, | | | | earning more money than they were expecting. |
| Blockbuster Entertainment and Starbucks have in | | | | Our entire Senior Management Team was |
| common? Well, I worked with all of them while | | | | focused on improving the "movie knowledge" so |
| their respective founders were still in charge and | | | | our store associates could match our members |
| each of those founders were dynamic visionaries | | | | to the movies that they would like. Once again, |
| with an obsession on winning and execution. | | | | the health of our system was gauged by the |
| I began my career in 1972 as an Project Engineer | | | | store level profits for our company and franchise |
| for Burger King Corporation, in Miami. My | | | | stores for the same reasons mentioned earlier. |
| contribution was to implement a Labor Scheduling | | | | My time at Starbucks was a short one, but when |
| System for store managers which improved the | | | | I joined the Howard Schultz team at Starbucks |
| proficiency for each store employee, created a | | | | Coffee Company, we had 250-stores operating in |
| much improved store layout and improved the | | | | the US and had just completed opening 100-new |
| overall sales-to-labor productivity. Years later, I | | | | stores the previous year. We were going to begin |
| became the first Vice President of Architecture | | | | to reproduce the West Coast success on the |
| and Construction where we designed all of our | | | | East Coast and we opened 150-new stores in |
| store configurations for maximizing our peak-hour | | | | 19-months, always focusing on delivering The |
| capabilities (Customers per Minute). We focused | | | | Starbucks Experience to every Guest, every day |
| our performance on our Sales-To-Investment | | | | in every store. We did that by focusing on the |
| Ratio and maximizing our store level profit | | | | job enrichment and training that we provided to all |
| because that was the common ground for | | | | of our Store Partners (most companies call them |
| company and franchise restaurants. | | | | employees). All of our growth was through |
| In 1981, I joined Wendy's during their tenth year. | | | | company-owned stores, but store-level earnings |
| Over the next nine-years, we opened thousands | | | | were the key to what has become a very |
| of new restaurants. During their peak growth | | | | successful, quality brand. |
| years, Wendy's opened over 500 new stores per | | | | What do all three of these brands have in |
| year. Internally, the health of our system was not | | | | common? How did they facilitate their "exponential |
| only gauged on the stock price and earnings per | | | | growth" plans? Obviously, all three brands had |
| share - we were focused on the profitability at | | | | access to "publicly traded" funds - but their |
| store level because that was the common ground | | | | successful growth rates were far more attributed |
| we had between the Company-owned and | | | | to other commonalities. |
| Franchise-owned restaurants. We knew that if our | | | | All three brands had a point of difference from |
| franchisees were making more money - they | | | | their competitors. They differentiating and |
| would build more stores. If the company stores | | | | exploiting that difference against the industry, |
| were making more money - we would report | | | | while hiring and training the "internal customer" |
| higher earnings and everybody would win. Our | | | | dedicated to exceeding the expectations of the |
| Wendy's franchisees were a critical barometer to | | | | "external customer". |
| how we were doing. We had | | | | Equally important to an exponential growth |
| Two-Commandments regarding our franchisees. | | | | strategy is never build new stores beyond your |
| 1. Never give a franchisee the simple privilege of | | | | ability to develop a quality staff to operate them. |
| paying more royalty without any incremental | | | | In all 3 of these companies, we had a |
| flow-thru profit. | | | | "people-plan" as part of our "asset-plan" for |
| 2. We don't make money on royalty income. We | | | | growth. In fact, growing pains are simply the |
| only make money when the franchisee is building | | | | result of growing a business faster than your |
| more restaurants and that won't happen if you | | | | ability to operate. |
| violate Commandment #1. | | | | Never expand by transferring experience |
| Our entire Senior Management Team at Wendy's | | | | managers into your new operation unless you are |
| was committed to constantly improving the | | | | guaranteed that there is competent management |
| External Guest Experience by focusing on the | | | | to replace them. To do otherwise, you will |
| Internal Guest (most companies call them | | | | experience "profitless-prosperity" - or |
| employees). Dave insisted on quality food, quick | | | | negative-same-store-sales while you are growing |
| service and clean restrooms. To all of us, Dave | | | | exponentially. |
| Thomas was more than our founder and spiritual | | | | Regardless of your industry, your customers are |
| leader. He was also Wendy's dad. | | | | most essential to your business success and your |
| In 1990, I joined the Wayne Huizenga's group at | | | | ability to survive during a good economy and the |
| Blockbuster Entertainment, when we only had | | | | poor economic times. Constantly upgrade your |
| 900-stores open. During the next seven years - | | | | staff, especially during periods of economic |
| we never opened less than 700 new stores in | | | | slowdowns because if you are focused on |
| any given year and when I left, we had 6,500 | | | | outstanding customer service, mediocrity is most |
| stores operating. That growth was due to | | | | apparent when sales begin to slide. |
| company-owned and franchise-owned stores | | | | |